David Nevue, 36, has been a solo pianist for more than 15 years, spending his nights and weekends playing at coffee shops, special events, and malls around Springfield, Ore., a town of 51,700. During the day, he worked for online-security company Symantec. No matter what he tried, however, his music career wouldn't catch fire. His first album, self-published in 1992, gathered dust at local shops.
Then along came the Internet. Around 1995, Nevue created his first Web page, www.DavidNevue.com. In 1996, he launched a site for piano enthusiasts, featuring music reviews and links to other sites, plus information on everything from sheet music to the history of the piano.
Nevue also promoted his own, New Age CDs online (soon, he'll have seven of them). As a result, he now sells $1,000 worth of CDs a month and distributes his music digitally through MP3.com. He recently ranked No. 13 on its charts, ahead of international stars like Alanis Morissette. Last fall, Nevue achieved every artist's dream: He quit his job at Symantec to do music full time -- a luxury he's able to afford thanks to online sales of his CDs and a book he wrote in 1997 on marketing music online.
HEADS ROLL. More musicians could soon be walking the same path. The music industry is in its worst shape since World War II, when it curtailed record production to conserve materials for the war effort. Terry Currier, president of Music Millennium record stores in Portland, Ore., blames this year's double-digit decline in CD sales partly on Web distribution of music. And in fact, a recent survey by the Recording Industry Association of America (RIAA), the music industry's lobbying group, showed that 23% of consumers bought fewer albums this year because they could get the music on the Web free.
Whatever the reasons, the major labels have laid off up to 20% of their employees, cut advances offered to artists, and trimmed their roster of performers: A few months ago, EMI axed pop diva Mariah Carey (she later signed with Universal). Veteran pop star David Bowie has also ended his relationship with EMI, and songstress Tori Amos left Atlantic Records last year.
Over the next two years, major labels could cut the number of acts they support by another 20%, believes Kembrew McLeod, a University of Iowa professor and producer of the film documentary Money for Nothing: Behind the Business of Pop Music. Those who survive could receive less money, says Bart Day, an entertainment lawyer in Portland, Ore.
DEBT BURDEN. As a result, more musicians are likely to try producing and selling music on the Web. "Artists are seeing this as a possibility for change, and they're taking more risks," says Jenny Toomey, executive director of the Future of Music Coalition, a digital-music lobbying group in Washington, D.C.
For many musicians, the result could be positive. Without the middlemen -- the labels, publicists, and professional-artists' organizations -- many musicians could end up making more money than they did via deals with major labels, say industry insiders. Take 1960s and 1970s star Janis Ian, for example. In her column in Performing Songwriter magazine, she recently estimated that after recording more than 25 albums, she still owed her label money for distributing and promoting her work.
Ian's story is typical: Most artists owe their labels up to $1 million for producing and promoting their music, estimates McLeod. They're supposed to pay off that debt with record sales. But 18 out of 19 records fail, and most deals leave artists in debt.
DIY STUDIOS. By contrast, artists who sell their work independently usually garner $8 on a CD retailing for $16, instead of $3 or less when they record for a label, estimates Danny Goldberg, chairman and CEO of New York-based independent label Artemis Records, which has produced hits like Who Let The Dogs Out.
There are other reasons for this fatter payoff: Recording equipment has become cheaper and better -- now allowing artists to record quality CDs at home. Plus, when distributing tracks digitally, artists no longer need to worry about economies of scale, a prime concern when it comes to mass-marketing CDs, says Toomey.
By 2007, nearly one-third of music purchases will move online, according to a July 23 estimate by market researcher Jupiter Research. Jupiter estimates that digital-music sales should reach $1.75 billion by then, up from about $40 million today.
DIRECT CONNECTION. Promotion on the Web is also cheap -- and can be very effective. Ian, for instance, has discovered that free downloads have increased sales on her site, www.JanisIan.com. That's ironic, given the music industry's complaint that free music on the Web is causing its current troubles. But Ian found that when now-defunct free music service Napster offered downloads of some of her songs, record sales on her site jumped by $2,700 a month. She believes that people who never heard her music before listened to the free tracks, liked them, and came to her site for more.
For artists who might have trouble getting airplay, Internet radio offers an opportunity as well. Starting Aug. 1, Artemis began a one-year test that allows Internet-radio sites to play its music for free. Currently, these stations must pay royalties to record companies of 70 cents per 1,000 listeners. "It made sense for us to wave those fees," says Artemis CEO Goldberg. "Our short-term marketing considerations outweigh any of these fees. I thought that would be good for our artists."
In fact, the Web might be one of the most direct ways for musicians to connect with their fans. For instance, since members of the band Radiohead began letting their fans instant message their Web site for tour dates and trivia, their fan base has skyrocketed, says Stacey Herron, an analyst with Jupiter. Rock band Weezer has allowed music lovers to download its work-in-progress -- and claims to have benefited from the early feedback. Such efforts can pay off in higher sales. Thus, the Dave Matthews Band, which released its latest CD after fans had already exchanged digital copies of the music for a year, saw the record catapult to the top of the charts.
SIGNAL-TO-NOISE RATIO. Independent musicians may find that the loyal fan base they gained on their own will help get them a better record deal, says Christopher Knab, a music consultant in Seattle. For instance, one of North America's largest independent labels, KOCH Entertainment, allows established musicians, like singer Carole King, to retain rights to their songs. It might also consider giving the artists a higher split of revenues, as well as letting the musicians participate in decisions on how to market and promote their music, says CEO Michael Koch. By comparison, major labels usually only pay artists 5% to 10% of the retail price of their CDs in royalties. And musicians usually lose all rights to their songs.
Of course, making it on your own in the music business is tough. A major label might spend $200,000 or more on recording a CD, estimates entertainment lawyer Day -- plus up to $1 million on promoting an artist. Considering that about 400 new records come out each week and only 1% of them get radio play, getting the music in front of an audience is a long shot, says consultant Knab.
Whenever a beginner asks for advice on how to get a major record deal, Nevue shrugs: "Why would you want that life? Watch VH1's Behind the Music [a show on artists' lives]. These people are unhappy." Independent musicians can rarely reach the sky. "Only certain artists are going to be the Britney Spears of the world," says Knab. Thanks to the Web, though, performers may no longer have to reach Britney's level of stardom to make their living with music. By Olga Kharif in Portland, Ore.